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POLITICS & ECONOMY BUSINESS

After years of delays, Cambodia could soon be ready to pump oil page 16

Inside South Korea’s chilly economy

Nov. 11-17, 2019

98

The construction site of the Tun Razak Exchange in Kuala Lumpur,

among the projects of the scandal-plagued state fund

1Malaysia Development Berhad.

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THE LONG ROAD BACK

ON THE COVER

Anwar Ibrahim is within touching distance of Malaysia’s premiership, the culmination of a decadeslong journey that took him from rising political star to a prison cell. But with the country’s politics as febrile as ever, will he truly be able to deliver on his radical promises?

THE LONG JAMES CRABTREE Contributing writer

Path to a power handover

POLI

TICS

1MD

B

2000

1982 Joins United Malays National Organization, then the largest party in Malaysia’s ruling coalition, BN

2012 Anwar is acquitted of sodomy; the prosecution lodges an appeal 2014 The Court of Appeal

overturns Anwar’s acquittal, and he is sentenced to five years in jail

2015 Federal Court upholds the appeal court decision; Anwar is jailed

2018 Anwar is released from prison and granted a royal pardon, allowing him to return to front-line politics. He returns to parliament via a by-election

2006 Anwar announces his intention to contest the 2008 elections

2008 Fresh allegations of sodomy are laid by an aide.In August, after his ban expires, Anwar wins a by-election and is finally returned to parliament

1997 Oversees Malaysia’s response to the Asian financial crisis

1998 Fired from government and arrested under the Internal Security Act. Anwar is beaten by the then-chief of police, Rahim Noor, who later served a short sentence for assault

1999-2000 After two trials widely condemned by human rights groups, Anwar is convicted of corruption and sodomy, for which he is handed sentences of six and nine years, respectively. For much of his sentence, he is in solitary confinement

Minister for Agriculture

Minister for Youth,Sports and Culture

Minister of Education Deputy Prime Minister

Minister of Finance2004-05 Sodomy conviction is partially overturned. Anwar is released from prison, though his corruption conviction is upheld by the Federal Court, barring him from reentering politics for five years. Anwar works in academia in the U.S. and U.K.

2018 Najib is arrested on suspicion of corruption over the 1MDB scandal

2016 Malaysia’s attorney general says no evidence of wrongdoing in 1MDB case; U.S. Department of Justice opens a separate case

2015 The Wall Street Journal first breaks news of widespread corruption at 1MDB

2009 Najib’s government establishes 1Malaysia Development Berhad, a state-backed investment fund

2009 Abdullah steps down and is replaced as prime minister by Najib Razak

2008 BN calls elections for March, before Anwar’s ban from politics expires. Wan runs in his place at the head of the opposition coalition, which now includes most of the major opposition parties. For the first time since 1969, BN loses the two-thirds “supermajority” that allows it to amend the constitution

2007 Huge “Bersih” pro-democracy rallies are held in Kuala Lumpur, calling for clean elections

2004 BN, now led by Abdullah Ahmad Badawi, wins back many seats in a general election

2003 The PKN merges with the Parti Rakyat Malaysia to form the Parti Keadilan Rakyat (PKR), headed by Wan Azizah, Anwar’s wife

1999 The PKN joins other opposition groups to contest a general election, which BN wins, but with a significantly reduced share of the popular vote

1998 The reformist Parti Keadilan Nasional (PKN) is formed, with Anwar a leading member

2013 Anwar leads the PKR and the opposition coalition in the general election. The opposition wins the popular vote, but not enough seats to unseat the BN government

’86 ’90 ’95 ’99 ’04 ’08 ’13 ’82 1981 ’18

Opposition parties: Democratic Action Party (1982, 1986), People’s Concept (1990, 1995), Alternative Front (1999, 2004), People’s Pact (2008, 2013), Alliance of Hope (2018)Source: Nikkei Asian Review research, Election Commission of Malaysia

Barisan Nasional (BN) OthersOpposition

Parliament seats(in percent)

5.885.7

Popular vote (in percent)

19.6 21.1

60.550.935.6

57.2

19.9 15.3

53.4 65.2 56.5

40.2

63.9

24.0

51.4

47.4

47.4

50.9

33.8

45.7

ANWAR TIMELINE

2018 The opposition coalition, now headed by Mahathir Mohamad, storms to a shock victory, unseating BN for the first time since Malaysia’s independence in 1957

Mahathir Mohamad (1981-2003) Abdullah Ahmad Badawi (2003-2009) Najib Razak (2009-2018) Mahathir Mohamad (2018-)PRIME MINISTER

Berhad over which he presided, by many measures the largest fraud in Asian corporate history.

“They say, ‘Oh, the Malays are suffering! We need to do more!’” Anwar says, his eyes fl ashing. “But none of them articulate the problems of poor governance and corruption and the squander-ing of billions by the Malay elite!” Then he pauses and smiles, as if checking himself. “You are provoking me. I’m getting angry.”

Anwar has good cause for anger, having spent more than a de-cade incarcerated at the hands of political opponents. His initial spell came during Mahathir’s long fi rst period as prime minister, which ran from 1981 to 2003. A fi ercely ambitious leader, Anwar served as fi nance minister while positioning himself as heir ap-parent, until the two men fell out spectacularly around the time of the Asian fi nancial crisis in 1998. The result left Anwar in prison

10 11Nikkei Asian Review Nov. 11-17, 2019

ON THE COVER

Read more at asia.nikkei.com

also a topic on which Anwar has grown adept at defl ecting questions. Instead, he wants to talk about his reform ambitions. During decades in opposition, he often pledged radical changes to clean up politics and heal racial disharmony. Now, as prime minister-in-waiting, he may soon be in a position to do some-thing about it.

Yet his is far from the only vision for Malaysia. Just a few days

before our interview the Malay Dignity Congress, an infl uential ethnic nationalist group, held a large rally in the capital, rejecting just the kind of plural democracy Anwar supports. He dismisses the movement’s “Malaysia for the Malays” rhetoric, as well as its unwillingness to grapple with the ethical failures of previous Prime Minister Najib Razak -- and, in particular, the megascandal involving state-owned investment fund 1Malaysia Development

KUALA LUMPUR For a soft-spoken politician, Anwar Ibrahim angers quickly when talking about corruption.

“We have tried, for the last half-century, a pro-Bumiputra pol-icy that benefi ted cronies and elites,” he says, referring to the entrenched, race-based affi rmative action system that favors his country’s majority ethnic Malays. “Look at the fi gures. Poverty has increased! Inequality has increased!” he goes on, his voice ris-ing as he counts the points off on his fi ngers. “It becomes like a clientelist system. And that needs to be rejected!”

The Nikkei Asian Review met Anwar, 72, in Kuala Lumpur during October to discuss Malaysia’s future, more than a year after his opposition Pakatan Harapan -- “Alliance of Hope” -- co-alition triumphed unexpectedly in national elections. It was a vic-tory he celebrated from inside a prison hospital, however, having been imprisoned two years earlier on what many legal observers view as politically motivated charges of sodomy.

While awaiting release, Anwar could only watch as his long-time rival-turned-ally Mahathir Mohamad took power as prime minister. Now, he is waiting once again, this time for the ful-fi llment of an opaque pact with Mahathir, in which the veteran prime minister is supposed to hand over power -- reportedly, within two years.

The vague details of that agreement -- when exactly will it happen? on what terms? -- are staple gossip in Malaysia, and

for six years, often in solitary confi nement, on what many viewed as trumped-up sodomy charges.

Over the decades since, he has climbed back to prominence, bit by bit. His admirers still see an unusual talent, combining mesmerizing oratory and rare intellect with the potential to turn Malaysia into a genuinely prosperous, multiethnic Islamic democ-racy. Last year’s election marked one political watershed with the defeat of the United Malays National Organization, the party that had dominated the country’s political system since independence. Anwar’s appointment as leader would mark a second signifi cant shift. While he himself is Malay, he heads the multiethnic Parti Keadilan Rakyat, meaning that as Malaysia’s eighth prime minis-ter he would also be its fi rst not to lead an ethnic pro-Malay party.

Yet, for all his talents, he remains a divisive and mercurial fi g-ure, and one whose policy plans remain hard to pin down. Much ink is spilled over the timing of his succession, but rather less on what he might do in a job for which he has spent half a lifetime preparing. His constraints are clear. Malaysia’s politics are frac-tious. Its economy is struggling. Polls tend to show him to be less popular than the more avuncular Mahathir, too, posing questions about his odds of winning reelection. Given all this, what hopes

His admirers still see an unusual talent, combining mesmerizing oratory and rare intellect with the potential to turn Malaysia into a genuinely prosperous, multiethnic Islamic democracy

Supporters of Mahathir Mohamad await his swearing-in as prime minister, following the opposition’s shock election victory in May 2018.

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12 Nikkei Asian Review Nov. 11-17, 2019

ON THE COVER

does Anwar have of not just talking elegantly about change, but actually delivering it?

UNCERTAIN TERM In person, Anwar seems relaxed about the task ahead, with a graying goatee and rimless wire glasses that give the air of a gracefully aging professor. We meet in a rented mansion in a plush Kuala Lumpur suburb, which aides describe grandly as a “transition offi ce.” Images from his career dot the walls: skinny 1970s student radical; fi rebrand government minister; global Muslim statesman, and now member of parliament for the coastal seat of Port Dickson, which he won in a by-election last October.

One display case holds the meager contents of his cell on his day of release, including a pair of sandals, a wooden back scratcher, and a string of misbahah prayer beads. More than a dozen well-thumbed books came home too: biographies of Barack Obama and the Prophet Muhammad; essay collections by Isaiah Berlin and the conservative British philosopher Roger Scruton; and, as if all those were not high-minded enough, the complete works of Montaigne.

Prison was arduous, he says, although his health has since recovered, with few aftereffects from spinal and shoulder surgery undertaken last year. Learning to work closely with Mahathir was tricky too. “It was diffi cult, initially, of course,” he admits of their

rapprochement, which began gingerly in 2016. The duo now hold weekly meetings in private, swapping notes and managing their fragile four-party coalition, of which Anwar’s PKR is the largest member. Although his wife is deputy prime minister, Anwar him-self holds no government role, a partly tactical decision which al-lows him to avoid public disagreements with Mahathir. “We are, I should say, cordial. Friendly. Very proper.”

Anwar says he still expects to take power next May, two years after the election, although many doubt his confi dence. In September, a few months after his 94th birthday, Mahathir said he

in the late ’80s and early ’90s

around from highs of

Source: IMF, World Bank

10%

Malaysia’s economy is expected to have grown

in 20194.5%

The district of Little India in George Town, Malaysia: Anwar Ibrahim heads the multiethnic Parti Keadilan Rakyat, meaning he would be the country’s first prime minister not to lead an ethnic pro-Malay party.

“There is an obsession with Najib as the source of all evil. I don’t share that view. … The judiciary was compromised. The media was compliant. The enforcement agency, too”

Anwar Ibrahim on the long-running 1MDB scandal

Malaysia’s poverty rate

According to government figures According to the U.N.

Source: Malaysian government figures, U.N.

49% 15%around

1% In 2019:In 1979:

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A controversial policy

Source: Malaysian government data

Malaysia’s “Bumiputra” policy was designed to address economic inequality between the Bumiputra ethnic group, comprised of Malays and other indigenous people, and other groups, notably Chinese Malaysians.

•Bumiputra receive a minimum 7% discount on property in new housing developments

•They also gain preferential access to government tenders, share offerings, automobile import permits and high-interest mutual funds

•Under the New Economic Policy of 1971, Bumiputra were supposed to own 30% equity in Malaysian companies by 1990. At the time, they owned 2%; by 2015, they still only owned 16%

Malaysia’s ethnic breakdownShare of population (in percent)

Examples of the policy

Other 0.7Indian

Chinese24.6 7.3Bumiputra

67.4

might stay for three more years, fueling rumors that he is not keen to hand over to his one-time protege. Anwar demurs. “As far as I’m concerned, the transition is on schedule,” he says. “There is a little bit of nitty-gritty about a specifi c date, which is yet to be discussed. But there is a general consensus among the leadership. What is more important is what I will do.”

In this, Anwar faces an awkward balancing act, pledging loy-alty to the government while also gently hinting he could do better. “It has been a positive beginning which makes things easier -- inshallah! -- for me,” he says of the coalition’s prog-ress. After a brief period of postelection euphoria, polls suggest Pakatan Harapan’s support has ebbed. Mahathir is struggling to implement a manifesto stuffed with promises written in op-position that its authors never actually expected to have to im-plement in government. Big ticket reforms have been limited, too, beyond replacing the country’s goods and services tax -- a decision many economists already view as a mistake.

Anwar says his “big priorities” when he takes over will be eco-nomic reform and curbing inequality. But the heart of his agenda, as well as its most combustible element, remains building a “needs-based” welfare system. Beginning in the 1970s, Malaysia began handing out jobs, university places and loans to Bumiputra -- “sons of the soil” -- Malays and indigenous people, aiming to narrow the gap with the more prosperous ethnic Chinese mi-nority, in particular. Bumiputras make up two-thirds of the pop-ulation, making the system popular, even while it is widely criti-cized as ineffi cient and wasteful.

Attempts to change this will be fi ercely opposed. “There are se-rious anxieties among the Malays, because for the fi rst time since independence [in 1957] they see this wave of non-Malay promi-nence and more assertiveness,” Anwar admits. Any reforms are, therefore, likely to be gradual; for instance, extending subsidies to poorer non-Malays, or opening school placements and govern-ment tenders. He hopes to make welfare more targeted and effec-tive too, reducing cash “gifts” and focusing instead on providing things like cheap credit to help start small businesses.

In prison, Anwar read up on economists like Thomas Piketty and Joseph Stiglitz, both of whom back higher taxes on the rich to support spending on basic state services. Such measures to re-duce inequality in general can, he hopes, persuade poorer Malay voters to support his specifi c reforms, even if they mean ending their racial privileges. “The narrative is not just about growth,” he says. “The concern is that you talk about growth and the elites and the rich keep on growing and inequality widens.”

Transparent welfare policies will create complexities for dif-ferent reasons, he admits. Race-based programs became a major source of graft, leading to what Malaysians call “leakages,” as money moved from public coffers to well-connected Malay busi-ness leaders and cronies of the old regime. “It requires a strong political will to act, because helping the poor will not enrich you,” he says of his alternative approach. “It boils down to the issue of

“It requires a strong political will to act, because helping the poor will not enrich you,” says Anwar.

proper governance. You have to tackle the issue of corruption and leakages in a very serious manner.”

Anti-corruption promises lay at the heart of Pakatan Harapan’s 2018 win, notably its pledge to get to the bottom of the 1MDB scandal, where as much as $4.5 billion went missing. Jho Low, a fi nancier accused of orchestrating the theft, remains at large, although in October the U.S. Department of Justice announced that he had agreed to forfeit nearly $1 billion in assets allegedly bought with the fund’s money. Instead, attention has shifted to former Prime Minister Najib, who has pleaded not guilty to doz-ens of charges ranging from money laundering to abuse of power.

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ON THE COVER

A station in the Malaysian town of Gemas, on the route of the now-postponed Singapore-Kuala Lumpur high-speed rail line.

The details emerging from these trials are “shocking,” Anwar says, although he suggests Malaysia’s problems run deeper.

“There is an obsession with Najib as the source of all evil,” he says. “I don’t share that view. What is pertinent here is the total abdication of responsibility by the institutions of governance. The judiciary was compromised. The media was compliant. The en-forcement agency, too.” He saves his most stinging criticisms for the elites that backed Najib in power. “Of course, there is the hy-pocrisy of the intellectuals -- the so-called intellectuals! They were muted. Some of them, the leadings ones, are virtually lackeys of the old corrupt order.”

Anwar’s specifi cs on governance improvements are harder to pin down. Bodies like the Malaysian Anti-Corruption Commission must be strengthened, he suggests. Technology can increase trans-parency. Ultimately, though, any cleanup begins by example: “We must produce leaders who are more accountable, and who don’t display their wealth and ostentatious living style,” he says. “They must not go on shopping sprees every time they go on overseas offi cial visits. These things need to be instilled.”

GROWING PAINS However quickly Anwar might try to push through his reforms, the economic challenges he faces will be im-mediate. The International Monetary Fund recently cut Malaysia’s growth projections for this year to just 4.5%, well below the level expected from a one-time Asian Tiger. Prices have risen too, driv-ing dissatisfaction among Malay voters in particular, while the government is struggling to meet its budget targets.

This slowdown is partly a byproduct of the government’s anti-corruption drive, suggests Donald Hanna, chief economist at CIMB, a Malaysian bank. Postelection investigations delayed or scrapped major projects agreed under the last government, in-cluding the controversial multibillion dollar Chinese-funded East Coast Rail Link, hitting investment growth.

But there are broader problems, from the need to break out of the country’s persistent middle-income status to addressing the vulnerability of its exporters to the ongoing global trade war. Not

Malaysia’s flagging FDIForeign direct investment to Malaysia (current prices, in billions of dollars)

Source: UNCTAD, official announcements, media reports

15

10

5

0 0

50

100

150

1990 2000‘95 ‘10‘05 ’15 ’18

Flow (left)

150

China-funded East Coast Rail Link canceled by PM Mahathir; restarted mid-2019, after China agreed to slash costs by over 30%

Stock(right)

only has Malaysia’s economy stagnated, but it now risks being eclipsed by economies like Vietnam as manufacturers shift away from China, Anwar suggests. “It is problematic, no question,” he says. “It’s not going to be as easy as it was when I was fi nance minister in the 1990s. Having said that, we need to fi nd a niche. We have to ask: What can be done?”

During that earlier period, international investors tended to view Anwar as a more economically liberal foil to the autocratic Mahathir, an image he seems keen to recover. “I was in New York with JPMorgan and Bank of America, and all they hear about Malaysia is 1MDB,” he says of a recent visit. “Now I want to make sure Malaysia returns as an attractive destination for domestic and foreign investments.”

Developing tourism and digital technology will be two pri-orities, he says. More carefully targeted incentives can per-suade global companies to relocate, as can streamlining bureau-cracy. Mature assets in areas like health care held by Khazanah Nasional, a sovereign wealth fund, should be sold off, with the proceeds channeled into areas with greater growth potential,

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such as Malaysia’s burgeoning technology and startup scene. “Don’t compete with the private sector,” he says. “There are effi -ciently run private hospitals. Let them run them.”

As he searches for investment, many believe Anwar will have few options but to turn back to China. Under Najib, Malaysia was an enthusiastic recipient of infrastructure funding from Beijing’s Belt and Road Initiative. The results were controversial, leading to graft accusations and project renegotiations, including the con-troversial rail link. China is a complex subject for Anwar, given his record of speaking up about Xinjiang, where more than a million ethnic Uighurs, almost all of them Muslim, are held in “re-education” camps -- a point he says he’d make again as prime minister. “You can’t expect me, having stayed in prison for 10 years and been denied justice, to completely ignore this,” he says.

Ties with the U.S. are no less tricky. “With [U.S. President Donald] Trump, of course, we have a problem. We tend to dis-agree with him on most issues of life and death.” Anwar enjoys deep links in Washington, having taught at Georgetown and Johns Hopkins universities. But he has not met the current presi-dent, and doesn’t seem to be relishing the prospect either. “I don’t know what I can discuss?” he says jokingly. “I don’t play golf.”

At base, Anwar is likely to aim to keep friendly ties with both China and the U.S., avoiding signifi cant swings in foreign pol-icy. But he says he still hopes to craft a role for himself as an in-ternational spokesman for progressive Islamic ideas. “There is a sad and tragic state of affairs in many Muslim countries, most of which are authoritarian, dictatorial, oppressive,” he says, while admitting that ability to do much about this will remain limited.

Anwar’s Islamic credentials remain a source of domestic po-litical strength, allowing him to deploy his formidable oratory to argue for reforms in theological terms. He rejects the fear that a more conservative and strident form of “political Islam” is on the rise in Malaysia, viewing religion instead as a progressive force.

“Without the issue of peace, justice, compassion as part of [Islamic] religious ethics, ‘Malayness’ becomes chauvinistic,” he says, nodding again to the risks posed by divisive nationalist groups like the Malay Dignity Congress. “I’m a Malay. I love my language, my culture. But I’m also a Malaysian. And I want to talk about justice and the rule of law and ethical governance.”

TICKING ELECTORAL CLOCK Anwar’s intellectual powers seem undimmed, at least judged by the references that tumble out of him, from Avicenna and George Bernard Shaw to Egyptian economist Samir Amin. Yet for all the breadth of his learning, crit-ics still see an ideological chameleon, a charge he brushes off.

“They say: ‘You come to [Kuala Lumpur] and talk about Shakespeare. And then you go to the village and talk about the Quran,” he says with a mischievous grin. “But I say: ‘On the con-trary, I can go to the village and talk about Shakespeare and then to KL to talk about the Quran!’” Does he have more work to do to win over heartland Malays? “Yes, yes, I do,” he says. The grin grows

wider. “But I have a slight advantage. I can still give a sermon.”This unshakable faith in his persuasive abilities lies at the core

of why Anwar is upbeat about his odds as prime minister. Even so, the political arithmetic is tough, according to Ibrahim Suffi an, a pollster. Pakatan Harapan was Malaysia’s fi rst government to be elected without backing from a majority of Malay Muslim vot-ers. Now Anwar must keep at least some of this group on board, or risk an UMNO resurgence. “His coalition would face a tough battle to win reelection in 2023,” Suffi an says.

Then there is the more immediate problem: taking power in the fi rst place. In public, he jokes that, having waited decades to be prime minister, he is content to wait a few more months. Resilient though he is, Mahathir cannot continue indefi nitely. His unwill-ingness to confi rm a date likely stems from an unwillingness to be viewed as a lame-duck leader.

Even were Mahathir to favor another successor, there are few suitable candidates. The coalition the two men manage is fractious and divided, too, as is Anwar’s own political party, notes Francis Hutchinson, head of the Malaysia program at the ISEAS-Yusof Ishak Institute in Singapore. Were Anwar’s patience to fray, it is all too easy to imagine he and Mahathir falling back into the acri-mony that marked so much of their history.

Anwar is more positive, suggesting the two men fi nally have a shared cause. “It is in his interest that his tenure is peaceful. And it is my interest to ensure the transition is peaceful, so I’m given sim-ilar support,” he says. That said, with tough reforms to deliver and the electoral clock ticking, he wants the handover sooner, not later. “I need at least two, two and a half years [until the next election]. So I think it’s fair to keep this date. And if I am able to do the right things in two and a half years, yes, I’m confi dent I can get back.”

Ultimately, he says, Malaysia needs to have the confi dence to reform itself. “After 60 years of independence, we have to look at ourselves. That is my dream,” he says. “If the government is dem-ocratic, if it is accountable, if we can rid the country of excesses of corruption and leakages, then a lot can be done.”

Old ties: Anwar, left, as deputy prime minister in 1996, speaks with Prime Minister Mahathir Mohamad at that year’s party conference.

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James Crabtree is an associate professor in practice at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He is author of “The Billionaire Raj.”